Can just reversing the process by which we fail at trade, give us profits?

<p id="isPasted">No, simply reversing a losing trade is not a guaranteed path to profits. While it can offer insights, blindly reversing without understanding the root cause of the loss can be risky.</p><p>Think of it like this: Reversing a failed recipe without understanding why it failed will likely lead to another failed dish. Instead, analyze the recipe, identify the mistakes, and make adjustments to achieve the desired outcome.</p><p>Similarly, analyze your losing trades, understand the reasons for failure, and adjust your strategy accordingly. This will lead to more sustainable and consistent profits. Remember, trading is complex, and blindly reversing losses is not the solution.</p>

<p id="isPasted">Yes and no. There are 3 main reasons why a strategy might have a low success rate.</p><ol><li><p>It’s random and had bad luck. If the strategy is just guessing or has no real solid foundation and it’s pretty much just going off of luck, it may have just had bad luck, in which case you cannot use this to predict future results.</p></li><li><p>Market Saturation. Often a strategy will work well, so the creator rents it out or sells it to a lot of owners of large accounts, or hundreds or thousands of small accounts. It becomes so viral that everyone throws a ton of money into it and over the years it becomes saturated so badly that people are losing money.</p></li><li><p>Pattern recognition, machine learning, or other algorithms that pick up on specific chart patterns&nbsp;(consistently and efficiently at finding said patterns).</p></li></ol><p><strong>In case 1</strong>, it just won’t work. When falling back on luck, you will always fail eventually. You can break even, but usually, there are trading fees that take even that away from you.</p><p><strong>In case 2</strong>, it will work as long as people keep over-saturating it. This is a very brilliant way to trade and is often missed by the majority of people. If you have someone running a signal group and they are over-saturating not only by having 1000 people following their signals,&nbsp;but actively recruiting new people to take the fall, you can play the opposite game and bet against the signals. As long as there are enough people and it’s a market that can be saturated (not binary options..well they can sort of be saturated if they are all on the same exchange, but this won’t have an effect on the actual price, so it won’t help you). Anyway, it has to be a market where thousands of people selling make the price drop. In this situation, just bet against the signals (do the opposite of what they say) and what “should” happen is the masses buy when the signal says buy, the big banks or whoever is manipulating said market see this and they sell, and you’re a step ahead because you already sold when the buy signal came out (due to buying when the last sell signal came out) or whatever your opposite strategy is.</p><p><strong>Case 3</strong>&nbsp;is the situation where this could shine. I have been using machine learning for about 6 months, and I came up with strategies for 8 different stocks. I ran the main strategy on all the different stocks, and on 7 of them I had 60% - 75% accuracy, while on the other 3, I had like 20% to 40%. I used this model to predict and trade on a demo account and for the 3 low percentages I just went in the opposite direction (as your question is stating). It works great. I got better results from betting the opposite of the 20% strategy than I did using the one with ~75% accuracy.</p><p>How to do it.&nbsp;Here’s how I did it, and how you can find out if it will work. You first will want to back-test the strategy over a long period. This is actually how I recommend creating the actual strategy. So for example, you take data from the year 2009 (or 2004, 2014, it’s up to you and results vary for different strategies) up to the present time. Cut this data into 95% / 5%. Use the 95% to create and back-test your strategy. Then test it on the 5% (which will be the last couple of months give or take.</p><p>Example: You create a strategy for the last 10 years (minus the last 2 months) with only 20% accuracy. Now program it to do the opposite of what it was doing before, then test that over the last 2 months. If you get higher than 50% accuracy, there’s a good chance it will work live. But there’s no telling how long. If you got 20% accuracy over 10 years, then 80% over the last 2 months, you have a really strong strategy. Tell no one. Run it live but keep it low risk and record your returns and account value so you can find out if returns are diminishing over time, or based on how much $ you are running on it. Some strategies work great on a small account, but if you get up in the 5-figure, 6-figure, or even 7-figure, they won’t work so well…so keep track of accuracy so you can predict when it will go below your preferred accuracy.</p>